Anti-bribery benchmarking

15th March 2017

The risk management and investigations consultancy Kroll, with the Ethisphere Institute, a US-based ethical business practices body, have released the 2017 Anti-Bribery and Corruption Benchmarking Report.

Their 2017 theme is “Beyond Regulatory Enforcement: The Rise of Reputational Risk.” Against a backdrop of regulatory and reputational concerns, more than one-third (35 percent) of all the risk and compliance managers surveyed expect their organisation’s bribery and corruption risks to increase in 2017, and more than half (57 percent) expect them to persist at the same levels as last year. Respondents believe the top risks to their anti-bribery and corruption programmes will come from third party violations (40 percent), complex global regulations (14 percent), and employees making improper payments (12 percent).

The reputational risk associated with bribery and corruption allegations is also on the minds of most respondents, the survey suggests. General reputational concerns went from being the least likely reason identified in last year’s report for a third party to fail a company’s vetting standards to being the most likely reason.

Steven Bock, Managing Director and Head of Operations and Research with Kroll’s Compliance practice , said: “It is clear the anti-bribery and corruption program can be viewed in the context of regulation, as well as more broadly as a means of protecting an organisation’s most valuable asset — its reputation.”

The survey suggests senior leadership’s engagement with anti-bribery and corruption efforts is on the rise. Half, 51 percent of respondents state senior leadership at their organisation is “highly engaged” with anti-bribery and corruption efforts, a 4 percent increase over the previous year.

Erica Salmon Byrne EVP & Executive Director of Business Ethics Leadership Alliance, Ethisphere , said: “All research points toward a clear link between ethics and performance, and with more involvement from leadership, we are seeing that anti-bribery and corruption efforts are being prioritised. Smart companies with strong compliance programs are taking note and adjusting their priorities accordingly in order to mitigate unnecessary risk and protect their company’s valuable reputation for integrity.”

Another trend is the dependence on compliance monitoring to capture post-onboarding bribery and corruption. More than half (55 percent) of respondents report they identified legal, ethical, or compliance issues with a third party after conducting initial onboarding due diligence. In 40 percent of these cases, the issue that was later identified did not exist at the time of initial onboarding. The value of ongoing monitoring is reflected in the confidence that survey-takers have in their anti-corruption work. Most, nearly 80 percent of those respondents who monitor all of their third parties, regardless of risk profile, believe they are either extremely or appropriately prepared to address global bribery and corruption risks. Conversely, feelings of preparedness drop as the level of ongoing monitoring goes down.

Kroll Senior Managing Director Joseph Spinelli said: “As compliance professionals, our respondents know the importance of monitoring when working with third parties. But this report highlights the need for an ‘interval monitoring’ approach to ongoing diligence, where the scope and frequency of monitoring efforts is determined based on risk.”

And Kroll Managing Director Robert Huff said: “With vague regulatory guidance, optimal frequency is subject to interpretation. Firms need to determine a level of monitoring so they can react appropriately, in a timely manner, to any changes in a third party’s risk profile.”

The report findings include:

– 49pc of respondents showed concern that they did not have enough resources to support anti-corruption efforts.
– One-third of respondents reported having a greater level of concern about personal liability than the prior year.
– 26pc of respondents said issues that were identified at the time of third party onboarding were not adequately addressed.
– 67pc of respondents reported engaging in M&A in 2016, but conducted lesser levels of due diligence on targets or targets’ third parties than expected.
– 37pc of CFOs maintain an active role in developing their organisation’s anti-bribery and corruption.